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Symon Meats is looking at a new sausage system with an installed cost of $450,000. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $64,000. The sausage system will save the firm $240,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $23,000.

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Question: If the tax rate is 35 percent and the discount rate is 9 percent, what is the NPV of this project?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91172488

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